Both the hyperventilation and suffocation alarm theories of panic together with recent research findings point towards a central role for respiratory dysregulation in Panic Disorder. Cognitive-behavioral treatment packages for Panic Disorder typically include respiratory training and hyperventilation exposure, but little is known about their physiological effects and specific contribution to outcome. Our preliminary study of home-based pCO2 feedback-assisted respiratory training suggests that teaching patients to raise their pCO2 relieves certain panic symptoms fairly rapidly, but whether it does so by preventing hyperventilation is uncertain. We propose comparing the results of two kinds of breathing training based on opposing theories. In this 3-year project we will recruit 75 Panic Disorder patients and 25 non-anxious controls. Patients will be randomly assigned to one of three groups: raise-pCO2 respiratory training (based on the hyperventilation theory), lower pCO2 respiratory training (based on the suffocation alarm theory), or waiting-list. Patients will be evaluated before, during, and at 1 month and 6 months after a 5-session, 4-week course of therapy. Besides the usual clinical outcome measures, we will gather in-vivo evidence for changes in respiration, both in response to standardized basal activation and hyperventilation tests and at other times during 24-hour monitoring using novel assessment systems. Our hypotheses include the following: 1) The raise-C02 procedure will produce more reduction in the frequency and severity of panic attacks than the lower-C02 procedure or waiting for treatment. If this common assumption is not upheld, and both procedures produce similar improvement, we can infer that they work nonspecifically. 2) The raise-C02 breathing training will lead to higher pC02 levels and the lower-C02 breathing training to lowerpC02 levels during tests and during 24-hour monitoring than before training. If this is not true, we will know that what is learned during the sessions is not transferred to other situations. 3) Clinical improvement in frequency and severity of panic attacks for both breathing training procedures will be better predicted by initial respiratory symptoms and respiratory abnormalities than by cardiac symptoms. If this is true, therapeutic application of breathing training should be restricted to patients with breathing complaints. In addition, we will characterize patients' pre-treatment respiratory dysfunction in ecologically valid settings. The general significance of this proposal lies in its multi-modal evaluation of respiratory training as a procedure for treating certain Panic Disorder symptoms and its extension of in-depth respiratory assessment beyond the laboratory for longer time periods, affording a better understanding of respiratory dysregulation in this disorder.